Saturday, September 26, 2009

Don’t blame insufficient land release for property price surge

REFER to Monday’s Forum Online comment by Mr James Tan (’High price of flats, not affordability, is the issue’) that ‘URA did not release sufficient land to build HDB flats in a timely manner, causing pent-up demand and a sudden surge in prices’ and that ‘in the 1970s, a typical three-room flat in Marine Parade, a choice location, cost about $9,500. Today, a typical flat can fetch as much as $300,000 in the new towns’. That is a 3,000 per cent increase over 40 years.

However, the increase in flat prices is primarily due to Singapore’s growth and prosperity as well as inflation. In 1970, Singapore’s per capita GDP was US$914 and last year it was US$37,597 (S$53,000), and increase of 4,000 per cent. And, of course, good old inflation: If you remember, in old cowboy movies where a dollar coin was made of gold, they would bite it to make sure it was genuine.

Land in Singapore is limited, and I believe the Urban Redevelopment Authority has so far managed supply and demand very well to maintain price levels. One possible problem ahead is that, as younger Singaporeans are better educated, better paid and more affluent, will the older generation be left behind?

Calvin Yong

Source: Straits Times, 26 Sep 2009

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